Why Employers Need to Invest in Retirement Planning Services
Employers need to invest in retirement planning services to help their employees prepare for their financial future. These services can include automated payroll deductions and contribution matching, as well as investment management advice.
This can help workers meet their retirement savings goals and avoid a shortfall in their golden years. It can also alleviate financial stress and improve physical health.
Reduced Employee Turnover
Most employees have lofty goals for their retirement savings, and a recent survey found that financial matters are the most common source of stress in the workplace. However, they often need to gain more knowledge about the best ways to save or invest their money.
To help, employers are increasingly offering tools and services to support their workforce’s financial preparedness. These include investment advice, financial wellness programs, and access to managed account options like 401(k) plans or traditional individual retirement accounts (IRAs).
Research by an HR tech company found that employees are 40% less likely to leave their employer within their first year if they have a workplace retirement plan. Those reductions in turnover translate to financial gains for employers. The company’s research indicates that a 401(k) saves small and medium-sized businesses $100,000 annually by reducing employee turnover.
In addition to offering retirement planning services for employers, companies can encourage employees to stay by providing vesting schedules that allow them to keep their employer contributions if they leave the company before they are fully vested. Moreover, several sites, suggest that graded and cliff vesting schedules can also reduce turnover by removing the incentive for employees to change jobs before they’re vested in their old company’s contributions.
Increased Employee Satisfaction
Providing access to retirement planning services can encourage your employees to participate in their workplace savings plans. Those that do are more likely to be happy, loyal, and productive. This can reduce your turnover and save you money on training costs. Employees often need clarification about the various options they have for their retirement plan investments.
You can help them to understand the value of their investments by delivering education and awareness through a variety of methods such as hard copy materials (flyers or newsletters), online interactive methods, videos, lunch-and-learn seminars, and vendor presentations. Some employees are still determining if their retirement plans and Social Security benefits will be enough to support them in retirement.
If they aren’t satisfied, they may not remain with your company for as long as you would like. By offering a retirement solution, you can help your employees feel confident that they will have enough for their retirement needs and make them want to stay with you. This can help boost your overall job satisfaction and reduce turnover costs.
Increased Employee Engagement
Employees put a lot of time, energy, and talent into their jobs. They want to know that their employers value their contributions and will help them achieve their retirement goals. Unfortunately, a lot of employees aren’t actively planning for retirement.
They may only engage with their retirement plans when they are new hires, during open enrollment, or when a significant life event happens. Plan sponsors can increase employee engagement by offering a range of resources and educational opportunities. They should also remember that different groups of employees need to receive different communication.
For example, younger workers can benefit from financial education and a competitive retirement plan that makes it easier to save early. In comparison, older workers should be encouraged to use automatic features like auto-enrollment and re-enrollment with matching. Employers should also offer various investment options to encourage participation and provide more choices for employees not ready to change their savings strategies significantly. In addition, they should use regular communications to keep participants informed about their investments and retirement plans.
The adage goes, “If you fail to prepare, you prepare for failure.” And, if you want your business to thrive, then preparation is vital. Whether it’s planning your business strategy for the future or getting prepared to tackle new projects, you should make sure you have the right tools in place to be successful.
For example, some companies offer retirement savings plans as part of their benefits package that provide tax-advantaged account options for employees and employers. A company-sponsored plan can help employees save for their future, which will also give the organization a competitive edge in recruiting and retaining top talent. Employees often face financial stress, which can interfere with their work performance and ability to save for retirement.
Providing them with financial wellness services and access to unbiased advisers can decrease their stress and improve their productivity at work. And this is something that a lot of employees value highly. According to a survey, one in four employees rank a financial wellness benefit with access to unbiased counselors as their most desired employer benefit.
Increased Customer Satisfaction
For HR and benefits professionals who have long struggled with getting workers to save enough for retirement or manage their 401(k) accounts effectively, offering advice through an online financial adviser service could be the answer.
A recent study found that retirement plan providers with intense digital experiences can increase the likelihood of retaining client assets even after participants change jobs. The study notes that 48% of those who gave their retirement plan provider a high score for digital satisfaction say they will keep their account at that provider when they change employers, while only 14% of those who give their retirement plan a low score on digital experience plan to do so.
Many people are overwhelmed by the financial aspects of their lives. Whether they are trying to balance savings with current bills planning for future needs or goals, a herd mentality can make them procrastinate on making good choices. Expert advice can help reduce confusion and encourage positive behaviors. This, in turn, can lead to increased customer satisfaction.